What To Expect From The Markets This Week - 200921


Saturday, September 18, 2021 07:40 AM / Proshare Content / Header Image Credit: EcoGraphics

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Nigeria: Economic Dashboard @ 170921 

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Editor's Note

Source: Proshare Research - September 18, 2021

Nigeria Economy

  • At the briefing which followed the 281st MPC meeting which held on the 16th and 17th of September, the Central Bank Governor, Godwin Emefiele disclosed that following the improvement in inflation and GDP growth rates, the committee decided to hold all policy parameters constant, the MPR was therefore retained at 11.5%, the Statutory Liquidity Ratio was held at 30% while Cash Reserve Ratio was maintained at 27.5%. Meanwhile, the CBN Governor reacting to the fall of the Naira in the parallel market, questioned the pricing mechanism of Aboki-fx- a popular online fx trading platform while alleging that the rates on the platform are not market determined.
  • According to data released by the National Bureau of Statistics on Tuesday, Nigeria's Inflation rate sustained its downward trend in August, after falling for the fifth consecutive month as CPI rose by 17.01% Y-o-Y. August's inflation figure represents a 37-basis point decline in inflation rate compared to the 17.38% recorded in July 2021. Food inflation declined by 0.73 percentage points from 21.03% in July to settle at 20.3% in August, while Core inflation declined from 13.72% in July 2021 to 13.41% in August.
  • Speaking at the just concluded 14th annual banking and finance conference organized by the Chartered Institute of Bankers of Nigeria, CIBN, in Abuja earlier in the week, Governor of CBN, Godwin Emefiele, said, that the Central Bank of Nigeria, CBN, would roll out the N15 trillion Infrastructure Corporation of Nigeria (Infra-Co) next month. Likewise, the CBN Governor also hinted about the establishment of the Nigerian International Financial Centre, NIFC, in the next 12 months. The NIFC - a 24-hour financial centre that will complement London, New York, and Singapore financial hubs would act as an international gateway for capital and investments in the country
  • While interacting with a delegation of the Chartered Institute of Taxation of Nigeria, CITN, at the Presidential Villa, Abuja, Vice President Yemi Osinbajo said that global tech giants with significant economic presence will now be made to pay taxes even if they have not set up a permanent establishment. Citing the Finance Act 2019, the Vice President noted that the Minister of Finance may by order (of the President) determine what constitutes the significant economic presence of a company other than a Nigerian company.
  • President Muhammadu Buhari is set to present the Senate with another request for the consideration and subsequent approval of a fresh external borrowing to the tune of $4.054 billion, 710m Euros, $125m in an addendum to the 2018-2020 borrowing plan, this is separate from the $6.01bn euro bond lending.  Nigeria's external loan stock is therefore expected to reach an all-time high of $45.2 billion. The proposed addition to the debt stock indicates that external borrowings have skyrocketed the nation's foreign debt portfolio by 366 percent since 2015 when the total outstanding foreign debt was $9.7 billion. This comes in spite huge decline in actual revenue over a six-year period with 2020 recording N3.4 trillion, about a 37 percent decline against N5.43 trillion recorded in 2015.

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Global Economy

  • US Inflation reports show that Inflation is cooling in the U.S. as headline inflation reduced from 5.4% in June and July to 5.3% in August. The core inflation rate fell year on year to 4% from 4.3%. On a month-on-month basis, headline CPI grew by 0.3% in August, down from 0.5% in July while core sub-index of the CPI rose only 0.1%. Economists had anticipated the decline, but the magnitude was larger than expected, especially in core prices. While the view held by the Federal Reserves about inflation being transitory has been met with scepticism, August's inflation figures reinforce Chairman Jerome Powell's steadily cautious approach.
  • According to the Continental Migration Report 2021, produced by the Economic Commission for Africa (ECA) in partnership with the African Union Commission (AUC) remittances to Sub-Saharan African countries are expected to decrease in 2021 by 5.4 percent from approximately $48 billion in 2020 to a projected total of $41 billion, due to the lingering effects of COVID-19 pandemic. The report, which provided updates on global trends in migration and remittances, revealed that remittances to Sub-Saharan Africa fell by 12.5 percent to $42 billion in 2020. According to the report, Nigeria accounts for 40 percent of remittance flows to the region.
  • CPI statistics in Canada released on Wednesday in Ottawa, the consumer price index rose by 4.1 percent in August from a year earlier, the fastest pace since 2003 when inflation reached 4.2 percent. The August figure represents the fifth consecutive month of inflation reading above the Bank of Canada's 3 percent cap. Economists had expected a year-on-year rise of 3.9 percent in the CPI while July CPI came in at 3.7%. A surge in housing costs has been considered as the major driver of the country's annual inflation. Officials however maintain that price pressures are transitory.
  • According to data released by the Ministry of Statistics and Programme Implementation, on Monday inflation in India eased to a four-month low of 5.3 percent in August from 5.59 percent in July, supported by softer prices of food and a high base effect. Inflation remained within the Reserve Bank of India (RBI)'s tolerance band for the second consecutive month, as economists expect inflation to ease further in the coming months, the RBI is expected to continue with its accommodative monetary policy stance and begin interest rate hikes only in the next fiscal year. 

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Summary and Outlook

CPI data for the month of August shows that inflation fell from 17.38% in July to 17.01% - the fifth consecutive decline, analysts and government officials agree that the rate remains elevated. On the one hand, constituting a disincentive to investors and on the other a burden for the average Nigerian household.  Analyst noted that with food inflation at 20.3%, higher than headline inflation, the real income of the poorest (who tend to spend most of their income on food) has diminished considerably in the period. While there are expectations of lower food prices as the harvest season draws closer, the level of insecurity that prevailed during the planting season dampens the optimism. Expectedly, the Monetary Policy Committee at the end of its 281st meeting which held of the 16th and the 17th of September decided to hold policy rates constant. By its decision to hold rates, the CBN has decided to rely on open market operations to manage liquidity even as the expansionary fiscal policy stance of the government could continue to impose inflationary pressures on the economy. 

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Commodities Market

Weekly Review and Outlook



  • The Department of Petroleum Resources (DPR) on Monday said it has reopened eight petroleum tank farms shut down by the Lagos State Physical Planning Permit Authority (LASPPPA) in Ijegun-Egba, Lagos. The DPR noted that the LASPPPA lacked the constitutional power to shut them down because the industry was clearly under the Exclusive List.
  • OPEC's Monthly Oil Market Report published on Monday showed that Nigeria's crude oil production fell from 1.38mb/d in July to 1.27mb/d in August based on secondary sources.
  • The Director/CEO of DPR, Mr. Sarki Auwalu, on Wednesday noted that the department will hit the N3.2 trillion revenue target by December 2021 as it has already met over 70% of its revenue projection as of the end of August 2021.
  • According to a report released by the Petroleum Products Pricing Regulatory Agency (PPPRA) on Thursday, the volume of LPG (cooking gas) supplied into Nigeria declined by -20.5% M-o-M from 107,224.58MT in July to 85,264.81MT (38,040.46MT sourced locally and 47,224.35MT imported from US, Algeria, and Equatorial Guinea) in August 2021.
  • The data released by the NBS on Friday shows the average price paid by consumers for PMS (petrol) increased by +10.87% Y-o-Y and decreased by -0.58% M-o-M to N164.91 in August 2021. The product traded higher in Abia, Ebonyi, and Lagos, but traded lower in Niger, Borno, and Kano. 

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  • Oil prices went up on Monday as concerns that output disruptions in the United States following Hurricane Ida and expectations of higher demand supported the market.
  • Goldman Sachs on Monday estimated that the storm triggered about a 30 million barrels drop in U.S. oil inventories, pushed up U.S. refining margins, and widen the price spread between WTI and Brent.
  • OPEC's Monthly Oil Market Report for September pegged global oil demand in 2022 at 100.83mb/d and global oil demand for 2021 at 96.68mb/d. OPEC's crude oil production in August averaged 26.76mb/d. Non-OPEC supply growth for FY2021 was revised down by 170,000 mb/d to average 63.8mb/d due to the impacts of the Hurricanes.
  • China has resumed adding crude oil to its inventories in August after four consecutive months of draws, reflecting a weaker than expected refinery throughput rather than a bullish demand.
  • The Bank of America observed that Brent crude oil price could hit $100 in the next six months if western countries' winter is colder than expected.
  • The government of Argentina on Wednesday unveiled a bill to promote investment in oil and gas mainly to boost hydrocarbon production and oil export potentials for the country.
  • Libyan National Oil Corporation (NOC) on Thursday reported that crude export operations have returned at its ports after days of disruptions due to protests at the ports.
  • Africa's largest bank by market capitalization, based in South Africa, FirstRand Limited, on Wednesday, said it would no longer finance new coal-fired power plants in its updated energy and fossil fuel policy.
  • Oil prices fell about 1% on Friday as energy companies in the U.S. Gulf of Mexico restarted production after back-to-back hurricanes in the region shut output.
  • Brent had a weekly growth of 3.01% (see Table 1).


Gold declined by -2.21% while Silver also dipped by -6.11% W-o-W (see Table 1).



  • Cocoa prices grew by 0.76% this week.
  • Corn prices appreciated by 0.52% W-o-W while Sugar depreciated by -2.45% (see Table 1).


Table 1Weekly Change in Commodity Prices





Weekly Chg






































Source: CNBC, Proshare Research

*Data for 17th September 2021 is as of 4:50pm (Nigerian Time)



  • In the coming week, oil prices are expected to be mixed as energy companies in the U.S. Gulf of Mexico restarts production after back-to-back hurricanes in the region shut output.
  • Gold prices are expected to decline in the coming week, as the U.S. Federal Reserve plans to back on bond purchases while tapering plans remain on course.
  • Cocoa prices to be little changed in the coming week as improving conditions in West Africa's cocoa-growing regions could lead to record cocoa crops in 2021/22, which could further pressurize cocoa prices.
  • Sugar prices are expected to hold steady next week as bumper supplies from India may potentially put a lid on prices.
  • Corn prices are expected to be mixed next week as it remains under pressure amid tepid export demand for U.S. supplies.

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Fixed Income and Money Market 


Currency Market

The Naira depreciated against major currencies this week, both at the BDC market and I & E FX Window.


At the I & E FX window, the domestic currency fell by +0.21% on a week-on-week (W-o-W) basis to N412.88/US$ at the close of trading on Friday.


At the BDC market, it closed at US$/N565 depreciating by +3.29% against the US dollar, against the British pound it also fell by +4.70% to close at Pound/N780, and against the Euro by +3.15% to close at Euro/N655.


The Naira closed the week at $/N412.88 at the I&E FX window, at the NAFEX (spot market) it closed at $/N412.03


Average Benchmark Yields



% Change

I & E FX Window








BDC ($/N)




Source: FMDQ, AbokiFX, Proshare Research


Money Market

System liquidity was elevated this week despite the PMA settlement that took place causing money market rates to trade in single digits towards the end of the week.


However, at the close of the session on Friday, funding rates increased returning to its double-digit trend. Open Buyback (OBB) closed at 16.50% while Overnight (O/N) rates closed at 17.75% indicating a W-o-W rise of +17.86% for OBB and +22.41% for O/N rates.


Money Market Rate




% Change

OBB (%)




O/N (%)




Source: FMDQ, Proshare Research


Funding rates are expected to trade in double digits trend in the coming week in the absence of any inflow.

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Treasury Bills Market

Trading at the treasury bills market was mixed this week, as attention was towards Treasury Bills sold by DMO.


At the close of the market on Friday, average benchmark yields for T-bills rose by +13.43%% to 5.57%, OMO bills were up by +2.00% W-o-W to close at 6.34% while CBN's special bills dipped by -9.47%.


Average Benchmark Yields



% Change

T. Bills (%)




OMO Bills (%)








Source: FMDQ, Proshare Research


We expect activity next week to be dictated by the market liquidity situation. 


The DMO sold N155.87 billion worth of notes against N155.87 billion offered at its NTB auction this week. The 91-day, 182-day & 364-day instrument were allotted at 2.50%, 3.50%, and 7.20%, respectively. Rates remained unchanged compared to the previous auction

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FGN Bond Market

Sentiment in the bond market was mixed this week, with the bears sustaining dominance, with the mid-tenor note buoyed by a sell off sentiment.


The overall average benchmark yields closed at 8.58% for the week which rose by W-o-W by -3.87%.


Average Benchmark Yields



% Change

Short Tenor (%)




Mid Tenor (%)




Long Tenor (%)




Source: FMDQ, Proshare Research 


FGN Eurobond Market

The Eurobond market maintained its weak trend this week, with slight interests seen across several maturities.


Access Bank successfully issued US$500m Senior Unsecured Eurobond under its US$1.5bn Global Medium-Term Note Programme. The order book was oversubscribed by 3x (over US$1.6bn), this represents the largest order book for a Nigerian bank Eurobond transaction. The instrument is a five-year instrument that matures on the 21st of September 2026, with a yield and coupon rate of 6.125%. The coupon is the lowest outstanding Nigerian Bank Eurobond coupon, which is another first in the corporate Eurobond space.

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Nigerian Capital Market

  • Activity on the local bourse this week was choppy, however, with interests seen in several stocks. The NGXASI closed the week with a growth of +0.06% The Nigerian Stock Exchange gained N11.15bn, year-to-date return moderated to -3.29%, while the market capitalization settled at N20.29trillion.
  • The volume and value of stocks traded on the exchange this week declined by -39.95% and -17.76% respectively.
  • Sectoral performance across sectors tracked was bearish this week as the NGX Oil and Gas was the highest loser for the week with -3.35% while NGX Banking, NGX Insurance, NGX-IND and NGX Consumer Goods closed negative with -0.79%, -0.58%, -0.24% and -0.21% respectively.
  • Market breadth for the week closed negative with 21 gainers led by UPDC and UBCAP as against 38 losers led by SCOA and TRANSCORP

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Chart 1: Movement of NSEASI Index Points 10 Aug. 2021-17 Sep. 2021

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Source: NSE, Proshare Research


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The NASD OTC Security Index (NSI) and Market Capitalization closed the trading week with a negative movement in Market capitalization and NSI. The NSI and Market capitalization closed the week at 737.87 points and N641.34 with a decline of -0.29% and -0.29% respectively.


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Dangote and Toni Index   

Dangote Index closed the week negative with 128.91 basis points from 129.05 basis points recorded the previous week, representing a decline of -0.11%.


DANGCEM and NASCON closed flat while DANGSUGAR recorded a decline of -2.27% W-o-W.



Table 1: Dangote Index W-o-W Change

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Furthermore, the Toni Index closed positive with 101.80 basis points from 101.28 basis points recorded the previous week, a W-o-W growth of +0.51%.


TRANSCOHOT and AFRIPRUD closed the week negative with -10.00%, -3.13% respectively while TRANSCORP, UBCAP closed the week positive with +2.20% and +11.25%. UBA remained flat W-o-W.


Table 2: Toni Index W-o-W Change

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As sentiment remains weak, we expect a seesaw performance on the bourse in the coming week. However, corporate actions from listed companies and other macroeconomic developments are likely to impact investors' decisions.


In addition, we expect investors to monitor the movement of yields in the fixed income market.

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